00:00Katie mentioned that as it gets cheaper to launch these ETFs, is that why we've seen an explosion of launches?
00:05Because it's cheaper and you might as well see if something hits.
00:09Yeah, I think for sure the barriers to entry are like almost like non-existent now.
00:13But I think the barriers to success are really high.
00:15But I don't want to be that guy.
00:17But I think at some point there's going to be too many.
00:20You are that guy.
00:20There's going to be too many ETFs.
00:21Just own it.
00:22600 have launched in the last six months.
00:25I think that is an insane number when you think about it.
00:27And they can't all, I don't know if there's enough money to support all of them.
00:32Okay, you know the movie No Country for Old Men, right?
00:35Yes, I've heard of it.
00:36We have this phrase, no market for old analysts.
00:39And that's not the obvious.
00:40He's that guy.
00:41I'm way more liberal.
00:42Here's the thing.
00:44DRAM comes out of nowhere, memory ETF.
00:47It's now $15 billion.
00:49And 2X NVIDIA, $6 billion.
00:52When these things happen, they're going to draw people.
00:55Do we want to cancel capitalism?
00:56Is that the goal here?
00:58Like, don't you want people to experiment so you can get good products?
01:01Yeah, I think that gives everyone FOMO, right?
01:03But fine, you want to launch ETFs, that's capitalism.
01:06But when all these close, that's also capitalism, right?
01:10So, but I agree.
01:11I think that that, when you see these hits, that is going to draw in a lot of issuers.
01:15And because the cost is coming down to launch it.
01:17And so I think they're going to keep trying.
01:19They just need one to hit.
01:20But I think to get that one, there could be a lot of churn and products closing.
01:24Well, that's the thing.
01:25For the $6 billion, however many leveraged times NVIDIA ETF, there's, what, dozens that
01:31didn't work?
01:32And Athanasios, I mean, to that point, what kills a zombie?
01:37You know, how, when do we start to see these, you know, zombie ETFs walking around, just
01:42not really attracting assets?
01:44When do they eventually shut down?
01:45I think a market downturn.
01:472020 was probably a good example.
01:49I think a lot sort of got caught up during the COVID drop.
01:52So I think a market drop like that could wash out some of them.
01:56But I think they're also going to try to keep them going for longer.
02:00I think, you know, they've seen, we've seen ETFs that have been around, they close and
02:03then the strategy hits.
02:05So I think issuers want to try to keep these open as long as they possibly can to try to
02:10get like a winner.
02:11But I think it's just the field's going to get very, very crowded.
02:14It's not necessarily a bad thing.
02:15I think it's just something to be aware of.
02:17You know, I think about some newcomer companies to the space.
02:22Corgi Funds one day launched 35 new ETFs in a single day.
02:25We actually spoke with the CEO of Corgi Funds.
02:28Listen to what he said.
02:29When we look at ETFs, we don't see the level of aggressiveness or of service that we expect
02:35with regards to new issuers.
02:36And some thematics are very timely.
02:38The buffers obviously target more institutional buyers.
02:43I think it's kind of a mixed bag.
02:44And as long as we launch good products, I think we'll be okay.
02:49So he's basically hitting upon every category there and figuring that something will hit,
02:53right?
02:53I mean, what's the cost to them for keeping it going, even though they're not gathering
02:57assets?
02:58A lot.
02:58Especially for a small issue.
02:59Figure it's anywhere from $250,000 to $300,000 an ETF a year times whatever number that was.
03:06$35,000?
03:06That's a cost.
03:06Yeah.
03:07Wasn't Eric's idea to make me watch that?
03:09I guess.
03:10Yeah.
03:11But as you can see, there's a carrying cost.
03:13So I think, you know, either whether they're funded by some sort of investor, you have to
03:17kind of wait it out and hopefully that one hits.
03:19But then they eventually get to a point that maybe the AUM supports all these products.
03:23But I think at some point, the closures are going to have to keep up with the launches,
03:28right?
03:28So there's a little bit of an imbalance right now.
03:30Yeah.
03:31The phrase I use is a hard rain.
03:33A hard rain.
03:33Yeah.
03:34We need a hard rain that will really...
03:35To wash things out.
03:36Yeah.
03:36It just cleans the streets.
03:39But until that happens, the ETF that really triggered him was the Speed of Light ETF they
03:45filed.
03:46Yeah.
03:46What does that mean?
03:47It's some AI thing.
03:49There's like 50 AI ETFs coming.
03:50I agree.
03:51It's a little much.
03:52But one of your charts in here is assets per ETF.
03:56That number's gone up.
03:57Even though there's four launches a day, the average ETF has $3 billion.
04:02And that's up from $1 billion 10 years ago.
04:05That's how much money is coming into the halves.
04:09And I think that until that number starts to go down, I think you're going to be groaning
04:15a lot when you look at these filings.
04:16Yeah.
04:16I'm going to have to just learn to live with it.
04:18But I was shocked by it, too.
04:20So which means that assets are growing faster than even the products.
04:23Now, it's not being evenly distributed.
04:24But I think to Eric's point, when that starts to turn over, then maybe you'll see a pretty
04:29big wall.
Comments